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03rd of July 2011
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BoJ Tankan survey reveals fall in business sentiment

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by Kay Mitchell

The Bank of Japan’s (BoJ) closely watched quarterly Tankan survey has revealed business confidence has plunged after March’s earthquake and tsunami.

The index turned negative for the first time in more than 12 months with companies gloomy about the future.

The key index fell to a reading of -9 from a positive reading of 6 in the last quarter – sinking by 15 points and represented the first negative reading in five quarters.

Furthermore, the reading was lower than forecasts of -7.

The twin disasters on March 11 resulted in carmakers being forced to halt production as a result of parts shortages.

Firms such as Toyota, Honda and Nissan suffered heavily due to power shortages, which sent exports tumbling.

The survey suggested carmakers’ confidence was dented with this index diving by a record 75 points to -52.

The Tankan, which surveys almost 11,000 firms, measures the percentage of companies that think business conditions are good, minus those that believe they are bad.

The Tankan figures are closely monitored by the BoJ when deciding monetary policy.

However, the survey suggested companies expect an upturn by September due to increased capital spending.

Furthermore, there is renewed hope for the world’s third largest economy after industrial output recovered in May, surging by 5.7% on a monthly basis – the biggest gain since 1953, according to recent figures from the Trade Ministry.

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News posted: July 1, 2011

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